Intel Gives Up On 5G Smartphone Modems After Apple UPD
Intel was famously slow to adapt its business from PCs to smartphones, and had been fighting an uphill battle trying to claw back market share in the mobile market for years. The change announced on Tuesday is a recognition that fighting for modems was not worth the effort, given the massive, hundreds of billions of dollar opportunity on the datacenter side, where Intel is much stronger, said Moorhead.
Intel Gives Up On 5G Smartphone Modems After Apple
Apple said Thursday it will buy Intel's smartphone modem business, which includes several patents and about 2,000 Intel employees, for $1 billion. It's no secret Apple has been interested in developing its own modems for the iPhone, and buying up all that Intel IP puts it in a position to have one ready by the time its deal with Qualcomm runs out.
In April's settlement, Apple agreed to use Qualcomm modems for the next six years, with an option to extend the relationship another two. That gives Apple up to eight years to perfect the smartphone modems Intel was struggling with and get them up to par with Qualcomm's technology. Even though Intel had a history of building modems that didn't perform as well as Qualcomm's, Apple now has plenty of time to improve the technology before the clock runs out.
Once the deal is completed by the end of the year, Apple will own more than 17,000 patents related to wireless technology, including cellular communications standards and modems, which largely determine data transfer speeds in smartphones today. Intel said that as part of the deal it would still be able to make modems for other applications, including personal computers, cars and Internet of Things devices.
The deal had been a possibility since Intel backed out of the smartphone modem business in April. Intel pulled the plug shortly after Apple, which uses Intel's modems chips in its latest line of iPhones, dropped its lengthy legal battle over patent royalty rates with Qualcomm, the only other source for iPhone modem chips. Intel also announced in April that it would reassess its efforts around 4G and 5G technology.
The purchase of Intel's smartphone modem IP as well as transfer of employees is a very strong indicator that Apple is planning to develop its own modems going forward. To date, the company has remained one of the last users of discrete modems; virtually every other SoC supplier is integrating modems directly into their designs these days, and it stands to reason that Apple will want to go the same direction. While integrated modems do increase SoC development costs and complexity, ditching the stand-alone chip reduces the amount of total board space required for a phone, as well as reducing the amount of power needed to sling data around, two things that Apple has shown to appreciate as they have continued to push the envelope on thinner and lighter phones.
Closing out Intel's near decade in the smartphone modem business, the group, which the company bought from Infineon back in 2011, was ultimately never as successful as it was in the 2G/3G era. In the 4G era the only big customer that Intel ever landed was Apple, who is a very big customer indeed, but on the bubble at being large enough to sustain a modem development operation like Intel's. And with Intel struggling to get 5G modems out, Intel wasn't able to retain Apple as a customer going into the 5G era. As a result, selling off the business while retaining options to develop modems for next-generation devices would seem to be the most sensible option available to Intel.
The move basically guarantees the first round of 5G smartphones will all have Qualcomm modems inside them. Qualcomm had already secured the Galaxy S10 5G, LG V50 ThinQ, and other early 5G phones with its X50 modem-Snapdragon 855 tandem. Only the iPhone was very much in doubt. Apple is already using Intel modems in its iPhone XS and XR phones, and the assumption was that it would continue to partner with Intel for the first 5G iPhones, which are rumored to arrive in 2020.
Intel, on the other hand, has announced that it will continue to develop 5G solutions for markets that are aligned to the company's customer base. Looks like Intel has given up on the mobile market - a wise decision some would say as it continues to come under harsh criticism from certain quarters. As per the press release, Intel will, "retain the ability to develop modems for non-smartphone applications, such as PCs, internet-of-things devices and autonomous vehicles."
Apple will benefit massively due to this deal, as Intel's engineers and designs will give the company a serious leg-up over its primary competitor Qualcomm. While Qualcomm's got years of expertise in manufacturing smartphone modems, Apple's iOS-An chip integration is legendary. Apple's SVP of Hardware Technologies Johny Srouji is optimistic that the culture clash between Apple's existing employees and Intel's team will be smooth.
Intel had invested "billions of dollars" in developing smartphone modem technology over the past 10 years, which also included two acquisitions. The company was eventually able to score a design win in Apple's iPhones, becoming the exclusive modem supplier in 2018 amid Apple's legal war with Qualcomm. Intel is currently the supplier of modems for the new iPhone 11 lineup, but Qualcomm is set to provide 5G modems for 2020 as part of its settlement with Apple.
But the Intel acquisition should vastly accelerate Apple's plans to build its own modems, which is good news for iPhone owners. With complete control over one of the most important iPhone components, Apple will be able to improve its smartphone in new ways.
Fast Company's very own Mark Sullivan as well as Mark Gurman from Bloomberg are two among the several sources who have reportedly noted that Apple is now working on its very own modem for the company's future 2023 iPhones. The development reportedly started back in 2020 and was done after Apple acquired the majority of Intel's very own smartphone modem business from a year earlier in order to bolster its very own efforts.
Intel's modem will offer download speeds of up to 6 gigabits per second, making it about three to six times faster than current LTE modems found in many smartphones. It's a good bet that Apple will use the new modem. The company has been favoring Intel's radio technology at a time when Apple is locked in a legal battle over stolen trade secrets with Qualcomm, another provider of 5G modem tech.
Qualcomm, who after 6 years, will face even toughest competition from Apple modems and a tougher one during those times when Apple simultaneously launches its internally developed modem in the market.
Intel Corporation today announced its intention to exit the 5Gsmartphone modem business and complete an assessment of theopportunities for 4G and 5G modems in PCs, internet of thingsdevices and other data-centric devices. Intel will also continueto invest in its 5G network infrastructure business.
Research from Canalys has indicated signs of a growth in mobile device sales in the third quarter of the year. This increase is seen after two years of a decline in shipments. Global smartphone shipments have increased by 1% in Q3 2019. 350c69d7ab